U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to ___________________
Commission file number: 000-30191
TSET, INC.
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(Exact name of Registrant as specified in its charter)
NEVADA 87-0440410
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Two Centerpointe Drive, Lake Oswego, OR 97035
-------------------------------------------- -------
(Address of principal executive offices) (Zip Code)
(503) 598-1900
------------------------
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days. Yes [ X ]
No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares
outstanding of each of the issuer's classes of common equity, as of the latest
practicable date: Common stock, par value $0.001, of which 29,097,801 shares
were issued and outstanding as of September 30, 2000.
<PAGE>
TSET, INC.
FORM 10-Q
QUARTERLY REPORT
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements...............................................3
Consolidated Balance Sheets as of September 30,
2000 and June 30, 2000.............................................3
Consolidated Statements of Operations for the three
months ended September 30, 2000 and 1999...........................4
Consolidated Statements of Stockholders' Equity
(Deficit) for the three months ended September 30,
2000 and for the period from June 30, 1997
to June 30, 2000...................................................5
Consolidated Statements of Cash Flows for the three
months ended September 30, 2000 and 1999...........................6
Notes to Consolidated Financial Statements.........................7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................10
ITEM 3. Quantitative and Qualitative Disclosure of Market Risk.............12
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings..................................................12
ITEM 2. Changes in Securities..............................................12
ITEM 3. Defaults upon Senior Securities....................................20
ITEM 4. Submission of Matters to a Vote of Security Holders................20
ITEM 5. Other Information..................................................20
ITEM 6. Exhibits and Reports on Form 8-K...................................22
SIGNATURES
2
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PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The following comprise our condensed (unaudited) consolidated financial
statements for the three months ended September 30, 2000 and 1999.
TSET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, June 30,
2000 1999
-------------- ------------
Assets
Current Assets
Cash $ 634,325 $ 102,949
Accounts receivable, net 118,910 130,654
Inventories 811,742 623,991
Prepaid expenses 52,871 36,505
------------- -------------
Total Current Assets 1,617,848 894,099
Property and Equipment 182,702 165,696
Less: Accumulated Depreciation (57,669) (51,129)
------------- ------------
Net Property and Equipment 125,033 114,567
Other Assets
Intangibles, net 7,933,296 8,142,609
------------- -------------
Total Other Assets 7,933,296 8,142,609
-------------- -------------
Total Assets $ 9,676,177 $ 9,151,275
============== =============
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 283,466 $ 225,521
Accrued expenses 1,270,725 1,288,364
Notes payable, current portion 1,017,533 1,114,832
------------- ------------
Total Current Liabilities 2,571,724 2,628,717
------------- ------------
Long-Term Liabilities
Notes payable - 176,342
------------- -------------
Total Long-Term Liabilities - 176,342
------------- -------------
Minority Interest 44,984 -
------------- -------------
Shareholders' Equity
Common stock, authorized 500,000,000 shares
of $.001 par value 32,055 30,652
Capital in excess of par value 11,061,043 9,615,743
Retained earnings (accumulated deficit) (4,193,661) (3,300,179)
------------- ------------
Total Shareholders' Equity (deficit) 6,899,437 6,346,216
------------- ------------
Total Liabilities and Shareholders' Equity $ 9,676,177 $ 9,151,275
============= ============
The accompanying notes are an integral part of these statements.
3
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TSET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
Quarter ended September 30,
2000 1999
------------ ------------
Sales $ 388,838 $ -
Cost of sales 241,927 -
------------ ------------
Gross Margin 146,911 -
------------ ------------
Selling, General and Administrative expenses:
Compensation and benefits 473,310 48,350
Amortization of intangibles 209,313 -
Other selling general & administrative expenses 371,613 491
------------ ------------
Total Selling, General and Administrative expenses 1,054,236 48,841
------------ ------------
Income or (loss) from Operations (907,325) (48,841)
Other Income / (Expense) - -
Interest Expense (31,141) -
Minority Interests 44,984 -
------------ ------------
Net Income (loss) Before Taxes $ (893,482) $ (48,841)
Provision for Income Taxes - -
------------ ------------
Net Income (loss) $ (893,482) $ (48,841)
============ ============
Basic and Diluted Earnings (Loss) Per Share $ (0.03) $ (0.00)
============ ============
Weighted Average Shares Outstanding 30,979,489 25,033,090
============ ============
The accompanying notes are an integral part of these statements.
4
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TSET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
Quarter Ended September 30,
2000 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ (893,482) $ (48,841)
Adjustments to reconcile Net Income to net cash
(used in) provided by operations:
Depreciation and amortization 215,853 -
Unrealized loss on patent technology (44,984) -
Common stock issued as compensation 6,560 -
Change In:
Inventories (187,751) -
Accounts receivable 11,744 -
Prepaid expenses and other assets (16,366) -
Accounts Payable 58,373 -
Accrued Expenses and other liabilities (17,576) 48,500
----------- -----------
Net cash (used in) provided by Operating Activities (867,629) (341)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (17,498) -
----------- -----------
Net cash (used in) provided by Investing Activities (17,498) -
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 1,440,144 -
Minority Interest 250,000 -
Proceeds from short-term borrowings 199,743 -
Repayments of short-term borrowings (473,385) -
----------- -----------
Net cash (used in) provided by Financing Activities 1,416,502 -
----------- -----------
NET (DECREASE) INCREASE IN CASH 531,375 (341)
CASH
Beginning of year 102,950 536
----------- -----------
End of year $ 634,325 $ 195
=========== ===========
Supplemental disclosures of cash flow information
Cash paid during the year for
Interest $ 47,429 -
Income taxes - -
Supplemental schedule of non-cash investing and financing
activities:
Purchase of patent rights - 50,000
The accompanying notes are an integral part of these statements.
5
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TSET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND
THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998
<TABLE>
<CAPTION>
Retained Total
Common Stock Capital In Earnings Shareholders'
--------------------- Excess of Par (Accumulated Equity
Shares Amount Value Deficit) (Deficit)
<S> <C> <C> <C> <C> <C>
BALANCE at June 30, 23,976,730 $ 23,976 $ 31,743 $ (73,014) $ (17,295)
Net loss for the year ended June 30, 1998 (17,832) (17,832)
BALANCE at June 30, 1998 23,976,730 23,976 31,743 (90,846) (35,127)
Shares of restricted common stock
issued to Pangaea Group, LLC per CEO
management agreement 1,000,000 1,000 299,000 300,000
Shares of restricted common
stock issued for services rendered 25,000 25 9,975 10,000
Shares certificate cancelled (4,000) (4) (4)
Net loss for the year ended June 30, 1999 (351,674) (351,674)
BALANCE at June 30, 1999 24,997,730 24,997 340,718 (442,520) (76,805)
Shares reissued from prior year cancellation 4,000 4 4
Shares issued on August 31, 1999 to
acquire the patents and technology
of the utility meter 100,000 100 49,900 50,000
Shares issued on March 14, 2000 to acquire
Atomic Soccer USA, Ltd 1,037,555 1,038 1,805,212 1,806,250
Shares issued on March 14, 2000 to acquire
Kronos Air Technologies, Inc. 2,250,000 2,250 3,344,625 3,346,875
Shares issued on for May 9,2000 to acquire
EdgeAudio.com, Inc. 1,298,701 1,299 2,548,701 2,550,000
Shares issued on May 9, 2000 to acquire
Cancer Detection International Inc. 180,000 180 353,250 353,430
Shares issued on May 19, 2000 as compensation 14,815 15 49,985 50,000
Shares of restricted common stock
issued on June 30, 2000 for cash 768,860 769 1,123,352 1,124,121
Net loss for the year ended June 30, 2000 (2,857,659) (2,857,659)
BALANCE at June 30, 2000 30,651,661 30,652 9,615,743 (3,300,179) 6,346,216
Shares of restricted common stock
authorized on July 20, 2000 for cash 161,538 161 188,839 189,000
Shares issued on August 3, 2000
as compensation 5,000 5 6,555 6,560
Shares authorized on August 31, 2000
to liquidate debt of Atomic Soccer USA, Ltd 362,259 362 375,981 376,343
Shares of restricted common stock
authorized on June 30, 2000 for cash 832,000 832 831,168 832,000
Shares authorized on August 31, 2000 to liquidate
debt of TSET, Inc. 42,800 43 42,757 42,800
Net loss for the quarter ended September 30, 2000 (893,482) (893,482)
BALANCE at September 30, 2000 32,055,258 $ 32,055 $11,061,043 $(4,193,661) $6,899,437
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
TSET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
NOTE 1 -
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and notes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments necessary to present
fairly the information set forth therein have been included.Operating results
for the three-month period ended September 30, 2000 are not necessarily
indicative of the results that may be experienced for the fiscal year ending
June 30, 2001.
These financial statements are those of the Company and its wholly owned
subsidiaries. All significant inter-company accounts and transactions have been
eliminated in the preparation of the consolidated financial statements.
The accompanying financial statements should be read in conjunction with the
TSET, Inc. Form 10K for the fiscal year ended June 30, 2000 filed on
October 24, 2000.
NOTE 2 - INVENTORIES
Inventories are valued at their lower of cost or market. The FIFO (first-
in, first out) method is used to determine the cost of inventories. Inventories
at September 30, by major classification, are as follows:
2000 1999
--------- ---------
Raw materials $ 167,902 $ 203,921
Work in process 20,983 22,228
Finished goods 598,969 362,222
Freight in 23,888 35,620
--------- ---------
$ 811,742 $ 623,991
========= =========
NOTE 3 -- INCOME TAXES
The composition of deferred tax assets and the related tax effects at
September 30, 2000, and June 30, 2000 are as follows:
September 30, June 30,
2000 1999
---------- ----------
Benefit from carryforward of net
operating losses $ 863,993 $ 783,073
Other temporary differences 12,325 80,920
Less valuation allowance (876,318) (863,993)
---------- ----------
Net deferred tax asset $ - $ -
========== ==========
7
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TSET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
The difference between the income tax benefit in the accompanying
statements of operations and the amount that would result if the U.S. Federal
statutory rate of 34% were applied to pre-tax loss is as follows:
September 30,
-----------------------------------------
2000 1999
--------------------- ----------------------
% of % of
Pre-tax Pre-tax
Amount Loss Amount Loss
----------- -------- ----------- ---------
Benefit for income tax at
federal statutory rate $ 303,784 34.0% $ 16,606 34.0%
Non-deductible expenses ( 73,397) ( 8.2%) (680) ( 1.4%)
Increase in valuation
allowance (230,387) (25.8%) (15,926) (32.6%)
---------- ------- ---------- -------
Total $ - 0% $ - 0%
The non-deductible expenses shown above related primarily to accrued and
deferred compensation and to the accrual of restricted shares of common stock
for compensation using different valuation methods for financial and tax
reporting purposes.
At September 30, 2000, for federal income tax and alternative minimum tax
reporting purposes, the Company has approximately $3.1 million of unused net
operating losses available for carryforward to future years. The benefit from
carryforward of such net operating losses will expire in various years between
2011 and 2020 and could be subject to severe limitations if significant
ownership changes occur in the Company. Of the $3.1 million of unused net
operating losses noted above, approximately $1.1 million relates to losses
incurred by the Company's subsidiaries, Atomic and EdgeAudio. In fiscal years
prior to June 30, 2000, Atomic and EdgeAudio did not file their tax returns on a
consolidated basis with the Company. Accordingly, the $1.1 million loss incurred
by Atomic and EdgeAudio is further subject to separate limitations that restrict
the ability of the Company to use such losses.
NOTE 4 - SEGMENTS OF BUSINESS
The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Company operates principally in three
segments of business: the sports apparel segment manufactures and distributes
sports apparel to team organizations and retailers. The Kronos segment licenses,
manufactures and distributes air movement and purification devices utilizing the
Kronos(TM) technology. The speaker segment manufactures and distributes home
theater speakers and speaker systems. Although there are future plans for
expansion into foreign markets, in the quarter ended September 30, 2000, the
Company operated only in the U.S. The following tables provide a comparison of
revenues, net profit, total assets, amortization expense, in-process
research and development expense and interest expense for the year ended
September 30, 2000:
8
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TSET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
Sports
Apparel Kronos Speaker Other Total
---------- ---------- ---------- ----------- -----------
Revenue $ 365,848 $ - $ 22,990 $ - $ 388,838
Interest expense $ 31,141 $ - $ - $ - $ 31,141
Amortization $ 67,702 $ 67,841 $ 64,934 $ 8,836 $ 209,313
Net loss $ ( 47,786) $ (249,762) $ (224,918) $ (371,016) $ (893,482)
Total assets $3,370,274 $2,847,549 $2,709,450 $ 748,904 $ 9,676,177
Segment information has not been provided for prior years as neither the
Kronos or speaker segments had commenced operations. Atomic has revenue from a
single customer that represents $101,538 of the Company's consolidated revenue.
This customer is served by the sports apparel operating segment.
NOTE 4 - Earnings Per Share
Basic (loss) earnings per share is computed using the
weighted average number of shares both authorized to be
issued and issued and outstanding. Diluted (loss) earnings
per share is computed using the weighted average number of
shares outstanding adjusted for the incremental shares
attributed to outstanding options to purchase common stock.
Per share amounts disclosed in these Consolidated Financial
Statements are not shown on a dilutive basis but rather on a
basic basis as there are no stock options outstanding.
9
<PAGE>
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
The three month period ended September 30, 2000 was a
period that saw profit margins improve at Atomic Soccer to
37.1% from 15.1%. EdgeAudio saw sales of its home theater
speaker systems begin in earnest after getting an excellent
review in Sound and Vision magazine. EdgeAudio also worked
diligently on a sales agreement with Amazon.com which was
finalized after the quarter ended and just in time for the
holiday selling season. During the quarter,EdgeAudio sold
shares of a newly-authorized class of preferred stock to a
private investor; the preferred shares were purchased for
$700,000 cash. In addition to customary preference rights,
the terms of the deal provide that the holder of the
preferred stock will obtain share voting control over
EdgeAudio; however, the Company retains the right to veto a
certain class of transactions and has increased its
representation on EdgeAudio's board of directors. Company
management concluded that the arrangement of private
financing would not only enable EdgeAudio to move forward
with its growth plans at a more rapid pace, but would also
free the Company's financial and management resources to
enable acceleration of the development of its other very
high-value investment, Kronos Air Technologies. The Company
retains ownership of a majority of EdgeAudio's shares.
During the quarter just ended, Kronos continued
development work on its air purification/air flow device and
was close to delivering the KronosT device to be installed
in the crew quarters of USS Winston Churchill in late
October/early November. Kronos, along with Bath Iron Works
(BIW) a General Dynamics Company, received a contract from
the Office Of Naval Research (ONR) to study the Kronos(TM)
device for several applications on ships and submarines.
Other General Dynamics Companies including General Dynamics
Advanced Technology Systems (GDATS) and Electric Boat (EB)
will participate in this project. In addition, the KronosT
device was contracted to be installed in a Beta test
environment in a hotel application in Neveda, and in a
hospital application in eastern Europe.
Despite these activities, the Company generated no
significant revenues. Although the recently acquired
subsidiary, Atomic, has generated limited revenues during
the past several years, Kronos and EdgeAudio have primarily
been engaged in research and development activities,
establishing sources of supply, training personnel and
developing markets since their inception. As a result, the
company's ability to achieve profitability will depend on
its ability to successfully develop applications for certain
of its products, obtain regulatory approvals, and develop
the capacity to manufacture and extensively market its
products.
The Company can make no assurance that it will be able to successfully
transition from research and development to manufacturing and selling commercial
products on a broad basis. While attempting to make this transition, the Company
will be subject to all the risks inherent in a growing venture, including, but
not limited to, the need to develop and manufacture reliable and effective
products, develop marketing expertise and expand its sales force and its
presence on the internet.
Results of Operations
---------------------
This discussion summarizes the significant factors affecting the
consolidated operating results and financial condition of the Company during the
quarter ended September 30, 2000 and should be read in conjunction with the
consolidated financial statements and notes thereto included in this report
as well as those included in the Company's recently filed Form 10K.
The discussion herein with respect to the consolidated statements of
operations does not contain comparable information and no analysis of the same
is being given herein since it is not properly susceptible to narrative
comparison by virtue of the facts that (a) as indicated in Item 1 of Form
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10-K, the company was basically inactive from the time that it discontinued
operations in 1996 until the time that it was reactivated during late 1999 and
(b) from inception through September 30, 1999 it had no significant revenues
from operations.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the quarter ended September 30, 2000
Sales for the quarter ended September 30, 2000, mainly
from Atomic, were $388,838 while cost of sales were $241,927
resulting in a gross profit for the quarter of $146,911 and
a gross margin of 37.8%. Expenses amounted to $1,085,377 of
which general and administrative expenses accounted for
$844,923 or approximately 78% and intangibles amortization
expense accounted for $209,313 or approximately 18%.
Primarily as a result of the above, the net loss for the
quarter ended September 30, 2000 was $(893,482) thereby
increasing the Company's accumulated deficit to $(4,193,661)
at September 30, 2000.
CONSOLIDATED BALANCE SHEET AS AT SEPTEMBER 30, 2000
Total assets of the Company at September 30, 2000 were $9,676,177 of
which $811,742 of inventory, $2,555,350 of patents/intellectual property, and
$5,377,946 of goodwill accounted for approximately 8%, 26% and 56%,
respectively. Total current assets at September 30 and June 30 amounted to
$1,617,848 and $894,099, respectively, while total current liabilities for those
same periods amounted to $2,571,724 and $2,628,717, respectively,
creating a working capital deficit of $(953,876) and
$(1,734,618) at each respective period end. This working
capital deficit is mainly attribute to Atomic current notes payable incurred to
finance operating deficits during its development stage and early operating
stage. The reduction in the working capital deficit from June 30 to September 30
mainly due to a capital injection of
$1,021,000 and the satisfaction of $376,000 of Atomic notes
payable. Total liabilities as at September 30 and June 30,
2000 amounted to $2,571,724 and $2,805,059, respectively,
representing a reduction of $233,335 or 8.3%. Shareholders
equity (including the above accumulated deficit) as at
September 30 and June 30, 2000 was $6,899,437 and
$6,346,216, respectively, representing an increase of
$553,221 or 8.7%.
Liquidity and Capital Resources
-------------------------------
Net working capital at September 30, 2000 $(953,876)
represented an improvement over net working capital at June
30, 2000 of $780,742 or 45%. The current ratio improved from
34% at June 30, 2000 to 69.2% at September 30, 2000. The Company's
return on average equity was (9.1)% during the quarter ended
September 30, 2000. Net cash flow used on operating
activities was $867,629 for the same quarter.
The Company was able to satisfy its cash requirements for the quarter
ended September 30, 2000 though the issuance and sale of its
common stock and the issuance and sale of preferred stock of
its subsidiary EdgeAudio. It will
continue to satisfy cash needs in this manner in the near term until it
finalizes its private placement offering which will provide
working capital until the company can provide such from its
ongoing operations. The Company is engaged in other fund
raising activities and is attempting to gain access to
additional capital markets that could provide financial
resources in the event the private placement offering is not
successful. There is no assurance that these fund raising
efforts will be successful.
Important Factors Relating To Forward-Looking Statements
--------------------------------------------------------
This document contains numerous forward-looking statements about the
Company's business and future. The United States Private Securities Litigation
Reform Act of 1995 provides a "safe harbor" for certain forward-looking
statements. Our forward-looking statements are expressed in good faith and we
believe that there is a reasonable basis for us to make them. However, readers
are cautioned not to place undue reliance an such statements about our: 1)
11
<PAGE>
plans; 2) objectives; 3) goals; 4) strategies; 5) expectations for the future;
6) future performance and events; 1) underlying assumptions for all of the
above; and 8) other statements that are not statements of historical fact.
The Company makes these forward-looking statements based on its analysis of
internal and external historical trends and future expectations. However, such
statements involve risks and uncertainties that could cause our actual results
to materially differ from our forward-looking statements and there can be no
assurance that we will achieve the results set forth in these forward-looking
statements. In addition to other factors, the following are important factors
that could cause our actual results to materially differ from our
forward-looking statements: 1) the results of our product testing; 2) the time
and costs involved in obtaining regulatory approvals for our systems and
products; 3) develop or acquire new technologies; 4) competitive factors; 5) the
availability of financing on terms and conditions acceptable to us; 6) the
availability of personnel with requisite skills; and 7) the terms of any new
collaborative, licensing and other arrangements that we may establish.
ITEM 3. Quantitative and Qualitative Disclosure of Market Risk
The Company does not own any market risk sensitive
instruments and does not operate in any foreign countries
that would make is susceptible.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings - None
ITEM 2. Changes in Securities
During the year ended June 30, 2000, we authorized the following equity
securities, some of which were issued, none of which were registered as of
the date of their issuance:
On July 20, 2000, the Company authorized the issuance
of 161,538 common shares valued at $1.17 per share to one
entity in exchange for cash. The above shares will be issued
pursuant to the exemption provided for under Section 4(2) of
the Securities Act of 1933, as amended, as a "transaction
not involving a public offering."
On August 3, 2000, the Company issued 5,000 common
shares valued at $1.312 per share to Tracy Murphy as
compensation for services rendered. The above shares were
issued pursuant to the exemption provided for under Section
4(2) of the Securities Act of 1933, as amended, as a
"transaction not involving a public offering."
In August, 2000, the Company authorized the issuance of
362,259 common shares valued at $1.17 per share to five
persons in liquidation of debt of Atomic Soccer USA, Ltd.
The above shares will be
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issued pursuant to the exemption provided for under Section
4(2) of the Securities Act of 1933, as amended, as a
"transaction not involving a public offering."
In September, 2000, the Company authorized the issuance
of 832,000 common shares valued at $1.00 per share to three
persons in exchange for cash. The above shares will be
issued pursuant to the exemption provided for under Section
4(2) of the Securities Act of 1933, as amended, as a
"transaction not involving a public offering."
In September, 2000, the Company authorized the issuance
of 42,800 common shares valued at $1.00 per share to two
entities in liquidation of debt of TSET, Inc. The above
shares will be issued pursuant to the exemption provided for
under Section 4(2) of the Securities Act of 1933, as
amended, as a "transaction not involving a public offering."
ITEM 3. Defaults upon Senior Securities - None
ITEM 4. Submission of Matters to a Vote of Security Holders
- None
ITEM 5. Other Information - None
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits filed as a part of this Quarterly Report
on Form 10-Q are listed on the Exhibit Index immediately
preceding such exhibits, which Exhibit Index is
incorporated herein by reference. Documents listed on such Exhibit Index, except
for documents identified by footnotes, are being filed as exhibits herewith.
Documents identified by footnotes are not being filed
herewith, and, pursuant to Rule 12b-32 under the Securities
Exchange Act of 1934, reference is made to such
documents as previously filed with the Securities and Exchange Commission.
(b) Reports on Form 8-K
On September 18, 2000, the Company filed a Current
Report on Form 8-K dated September 18, 2000 reporting under
Item 4 its dismissal of Randy Simpson, CPA, P.C., and its
engagement of Grant Thornton LLP, as its independent
auditors.
On September 21, 2000, the Company filed a Current
Report on Form 8-K dated September 21, 2000 reporting under
Item 5 a press release announcing that its subsidiary
EdgeAudio had sold twenty-five thousand (25,000) shares of newly-
authorized preferred stock equal to twenty percent (20%) of the total shares of
EdgeAudio in a cash transaction to a private investor.
13
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on this 20th day of November 2000.
TSET, INC.
By /s/ Jeffrey D. Wilson
-----------------------------------
Jeffrey D. Wilson, Chairman of
the Board of Directors and
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below on
November 20 by the following persons on behalf of the registrant and in the
capacities indicated.
/s/ Jeffrey D. Wilson Chief Executive Officer
------------------------------------ and Chairman of the
Jeffrey D. Wilson Board of Directors
/s/ Richard A. Papworth Chief Financial Officer
------------------------------------
Richard A. Papworth
/s/ Erik W. Black Executive Vice President
------------------------------------
Erik W. Black
EXHIBIT INDEX
Exhibit No. Description
27.1 Financial Data Schedule.
14
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